Our Strategy for Creating Value: Chain Leadership
What do we bring to the market's party?
Our strategy is a "benefit" strategy. In common language, our value creation strategy claims to the client: "pay more and you are better off". Our strategy seeks to increase the WTP (Willingness To Pay) of the client by reducing total costs. Rather than offering the lowest price service, a more expensive design service or design product is offered. However because of this product or service, the client is in a position to cut other costs in his value chain (e.g. lower "still waiting" time, less rework). The client's WTP will increase if the increase in our service or product price is more than compensated by the client's cost savings.
Since our strategy seeks to redesign the value chain of the client, we call this strategy "chain leadership." It is a win-win approach in the sense that the client gets a total lower total cost and we (the supplier) a higher price.
We have evidences show that decisions affecting as much as 80% of the construction cost are taken when the feasibility or preliminary design is formulated. Therefore any design errors and omissions if detected and unresolved could be the origins of serious claims and reworks once the construction work begins. While the cost of design errors exceeds that attributable to those generated by construction (9.5% as opposed to 2.5% of the total project cost), some clients recruit designers (and consultants) on a competitive basis without due attention to the suitability and performance of those designers.
While our firm has chosen the value strategy we pursue, our choice has consequences for the supply chain knowledge we need to gather. Thus, we need to know not only our clients but also our clients' business, which means understanding the pressures it is under from rivals, entrants, substitutes and power pressures in the chain. And of course, we need to master also our own business and our supply chain.